Table of Contents
- Introduction
- What is the One Stop Shop (OSS)?
- Practical Steps for Submitting OSS Returns
- Conclusion
- Frequently Asked Questions (FAQ)
Introduction
July 2021 marked a pivotal change in the European Union's Value Added Tax (VAT) system for e-commerce. The introduction of the One Stop Shop (OSS) reform aimed to simplify the VAT compliance process for businesses selling goods and services across EU borders. Before July 2021, the Mini One Stop Shop (MOSS) was in place for businesses providing telecommunications, broadcasting, and electronic (TBE) services. The OSS scheme now extends these benefits to all business-to-consumer (B2C) services and distance sales of goods within the EU, along with certain domestic supplies.
This blog post delves into the nuances of the OSS, the changes it brings for online sellers, its benefits, registration processes, exclusions, and the implications for both EU and non-EU sellers. By the end of this post, you will have a clear and comprehensive understanding of the new OSS regulations and how to navigate them effectively.
What is the One Stop Shop (OSS)?
The One Stop Shop (OSS) system is an extension of the previous Mini One Stop Shop (MOSS) scheme, developed to streamline VAT reporting and compliance for businesses engaged in cross-border sales within the EU. It simplifies the process by allowing businesses to submit just one quarterly VAT return for all their sales across EU member states rather than registering for VAT in each country where they sell goods or services.
Benefits of the OSS
Implementing the OSS brings several key benefits to businesses, particularly those involved in cross-border e-commerce:
-
Simplified Compliance: Businesses storing goods in their home country and selling across multiple EU countries without local storage can now file a single home VAT return and one OSS VAT return per period.
-
Cost Reduction: By eliminating the need for multiple VAT registrations in different countries, OSS reduces administrative costs and complexity for sellers.
-
Streamlined Processes: The OSS centralizes VAT reporting in one member state, significantly easing the administrative burden on businesses engaged in cross-border sales.
Registration Process for OSS
To benefit from the OSS, businesses must register through the portal of the Federal Central Tax Office (BZSt) or their respective country's tax authorities. The registration must be completed by the end of a quarter to be effective from the next quarter.
Here is a step-by-step guide to register for OSS:
-
Access the BZSt Online Portal: Log in using existing credentials or create a new account. This step may require a certificate file and can take some time if you are creating a new account.
-
Submit the Registration Form: Find the "Registration notice for participation in the OSS EU regulation" form under "Forms and Services". Fill out all necessary information and submit the form.
-
Confirmation: Upon submission, the BZSt will confirm the registration in writing. This will be followed by detailed instructions on declaration periods and payment deadlines.
Exclusions from OSS
Although the OSS simplifies many aspects of VAT compliance, there are specific transactions that remain outside its scope and require separate reporting through standard VAT returns. These include:
- Domestic Sales: Sales made within the same country where the goods are stored must be reported via standard VAT returns.
- Business-to-Business (B2B) Transactions: These still need to be reported through regular VAT returns.
- Imports: Purchases and imports remain outside the OSS's remit, requiring traditional VAT reporting methods.
Impact on EU Online Sellers
One of the most significant changes resulting from the OSS introduction is the abolition of the old distance sales thresholds. Previously, businesses had to register for VAT in each country once they surpassed a specific sales threshold in that country. From 1st July 2021, a single EU-wide threshold of €10,000 applies.
Scenario Analysis for EU Companies
Alpha Services: A German company that stores goods only in Germany and sells to other EU countries without needing additional VAT registrations. Their VAT is filed through the OSS.
Beta Products: Another German company that stores goods in multiple EU countries. They must register for VAT in each of these countries and file VAT accordingly.
Impact on Non-EU Online Sellers
The changes apply similarly to non-EU sellers, abolishing distance sales thresholds for individual countries. Non-EU businesses must adhere to the following:
- Without EU Base Storage: Sellers must register in a chosen EU member state for OSS to handle EU-wide VAT reporting.
- With Storage in Multiple EU Countries: They must register for VAT numbers in each country where goods are stored.
Scenario Analysis for Non-EU Companies
Delta Limited: A non-EU company selling through Amazon UK to various EU countries. Amazon acts as a deemed supplier, and Delta must register for VAT in the UK, with OSS reporting covering sales to other EU countries.
Zeta Limited: A UK-based company storing goods in multiple EU countries, requiring VAT registration in each country of storage and using OSS for cross-border sales.
Practical Steps for Submitting OSS Returns
Submitting OSS returns involves a manual process, currently limited due to ongoing developments with local authorities' systems.
Data Organization for OSS Submissions
- Service vs. Product Sales: Separate these transactions to comply with differing VAT rules and rates.
- Domestic vs. Foreign Sales: Clearly differentiate sales based on the customer’s location.
- Country-specific VAT Rates: Detailed sorting of sales by EU country and applicable VAT rates, including reduced or standard rates.
Handling OSS Submissions
For Q3 2021, OSS returns cannot be submitted digitally and must be manually entered into the "My BOP" portal. Businesses should prepare for this by:
- Sorting sales data based on warehouse locations and VAT rates.
- Ensuring data accuracy and compliance with various countries' VAT laws.
Conclusion
The OSS system represents a significant shift in how VAT is managed for e-commerce across the EU. While it promises long-term simplification and cost reduction, initial implementation may present challenges. Both EU and non-EU sellers should carefully navigate these changes to ensure compliance and optimize their VAT reporting.
For personalized assistance with OSS registration and compliance, businesses can consult with specialized tax advisors like hellotax, ensuring a smooth transition and ongoing adherence to the new VAT regulations.
Frequently Asked Questions (FAQ)
Do I need more than one registration after OSS?
You will need VAT numbers in your home country and each EU country where you store goods.
Will I need to report all my sales through the OSS report?
No, only cross-border B2C sales are included in the OSS report.
How to register for OSS?
Register via the portal of the Federal Central Tax Office (BZSt) or your respective country’s tax authority before the quarterly deadline.
Can non-EU businesses use OSS reporting?
Yes, non-EU businesses can choose an EU member state for OSS registration, provided they have a standard VAT registration in that country.
Is OSS mandatory?
No, businesses can opt for traditional VAT reporting, but OSS is recommended to reduce administrative costs.
Understanding the OSS changes is crucial for any business engaged in selling goods or services across EU borders. By adapting to these new regulations, businesses can achieve compliant, efficient, and cost-effective VAT management.
